According to the NAR, existing-home sales have seen a 0.5% increase for the third consecutive month, attributed to lower mortgage rates in the autumn season, as stated by NAR Chief Economist Lawrence Yun. However, there are concerns about inventory growth starting to slow down.
My perspective on existing home sales has always been that the bar is set so low that even a slight improvement can lead to growth. This growth typically occurs when mortgage rates decrease, especially when they approach the 6% mark. Looking ahead to 2025, the data suggests a normal trajectory. Recent purchase application data indicates positive trends for the next 30-90 days.
Examining a historical perspective on existing home sales spanning decades reveals a consistent trend. Despite fluctuations in rates, taxes, prices, and insurance, there hasn’t been a significant crash in home sales since the end of 2022. Instead, a stable foundation has been established for future growth.
NAR Inventory in November:
- 1.43 million units: Total housing inventory, a 5.9% decrease from October but a 7.5% increase from November 2024 (1.33 million).
- 4.2-month supply of unsold inventory, down from 4.4 months in October and up from 3.8 months in November 2024.
Comparing the current housing market to the conditions of 2008, it’s evident that the situation is significantly different. In 2008, home prices experienced a 12% decline, which marked a major national price crash post-World War II. The data from that period indicates a stark contrast in the market dynamics.
NAR Total active inventory:
- In 2007: 4 million
- Currently: 1.43 million
NAR Months of supply:
- In 2008: over 10 months
- Currently: 4.2 months
Assertions that the current housing market is worse than 2008 seem unfounded when examining the available data from both periods.
NAR Median sales price in November:
- $409,200: Median existing-home price for all housing types, up 1.2% from one year ago ($404,400)
- This marks the 29th consecutive month of year-over-year price increases.
In hindsight, my predictions for negative year-over-year pricing data in the final months of 2025 have not materialized. Despite challenging year-over-year comps, home prices have remained stable. As we approach the end of 2025, the market continues to show resilience.
Conclusion
The current trajectory of existing home sales aligns with expectations, with sales rebounding from the lows of June. Favorable trends in our Housing Market Tracker data, coupled with the direction of mortgage rates, support this growth. While year-over-year sales comparisons have become more challenging, the recent nine-month high in sales indicates a positive trend since the mid-year downturn.